The central Arkansas spill caused by Exxon’s aging Pegasus pipeline has reportedly unleashed 10,000 barrels of Canadian heavy crude - but a technicality says it's not oil, letting the energy giant off the hook from paying into a national cleanup fund.

Legally speaking, diluted bitumen like the heavy crude that's
overrun Mayflower, Arkansas, is not classified as 'oil'. And it's
that very distinction that exempts Exxon from contributing to the
government's oil spillage cleanup fund.

Companies that transport oil are required to pay $.08 per barrel
into the Oil Spill Liability Trust Fund (OSLTF). The cash is used
by the US government to respond to oil spills. But there's a
catch - Exxon is exempt from paying into the fund for its Pegasus
pipeline, because it carries tar sands oil, not "conventional
oil."

"The IRS has classified tar sands as different from
conventional oil, and thus the tax levied to fill the liability
trust fund is not levied on tar sands crude. It's a loophole that
should be closed, as it doesn't line up with the actual intent of
the tax or the fund," campaigns director for Oil Change
International, David Turnbull, told RT.

Exxon's Response

Answering RT’s detailed questions, ExxonMobil stated they are
paying for all costs related to the spill. However, the company
didn’t reveal how much it contributes to the OSLTF, or the value
of the company’s crude which is not taxed by the law.

Exxon media relations manager Alan Jeffers told RT that teams are
working directly with residents of Mayflower and are “paying
all valid claims relating to the spill and providing interim
housing for people from the homes which the city of Mayflower
recommended be evacuated following Friday's spill.”

@ran ExxonMobil will
pay for cleanup costs in Mayflower, AR. Allegations to the
contrary are not true.

Keystone XL pipeline to carry same Canadian crude

The strange exemption of heavy bitumen crude from classification
as oil dates back to a time when the extraction of tar sands on a
large scale was thought improbable with technology available at
the time. However, while oil companies developed the means to
transform Canadian tar sands into a booming energy sector, the
legal definition of oil remained the same.

"Given how toxic and dangerous tar sands oil – or bitumen –
is, it’s entirely irrational that this oil would be exempt from
being taxed in order to pay for the Oil Spill Liability Trust
Fund. As these sorts of heavy oils that are exempt from this tax
continue to make up a larger percentage of oil transported in the
US, it will only serve to stretch the fund even further, while
putting families, communities, and ecosystems at greater
risk," Turnbull explained.

The burst comes in the midst of a heated debate surrounding the
controversial Keystone pipeline. If the plan goes through, the
pipeline would carry up to 590,000 barrels per day, some of which
would include the same type of dilbit, from the same region in
Canada. This has sparked concern surrounding just how much of the
pipeline's oil will be exempt from paying tax to the Oil Spill
Liability Trust Fund, in the same way that the Mayflower pipeline
has been.

Money from the Oil Spill Liability Trust Fund has already helped
to clean up another spill caused by a ruptured pipeline. In 2010,
more than 1 million barrels of diluted bitumen (crude oil) were
spilled into the Kalamazoo River. To make matters worse, unlike
conventional crude oil, bitumen heavy crude sinks. The ensuing
environmental impact has made that Michigan spill the most
expensive in US history, as toxic substances seeped into the
surrounding soil.

There is also the fear that bitumen heavy crude could be more
corrosive to pipelines than conventional crude. The oil industry
disputes the claim, and has produced scientific impact research
that does not reflect higher corrosion by transporting bitumen
heavy crude.

Judge Allen Dodson of Arkansas’ Faulkner County seemed to reflect
the concerns of those impacted by the latest spill of heavy
bitumen crude, saying: “Crude oil is crude oil. None of it is
real good to touch.”

Just as toxic

Although the Canadian crude travelling through the Exxon pipeline
isn’t considered ‘conventional oil’ by the US government, it’s
still extremely harmful when spilled.

"Tar sands oil spills, or bitumen spills, are indeed more
dangerous than 'conventional oil' spills. We have already seen
the extreme costs and damages of tar sands oil spills in recent
years, most notably in Michigan where an Enbridge pipeline
carrying tar sands in 2010 resulted in the costliest on-land oil
spill in US history," Turnbull said.

Turnbull called the tax exemption "irrational,"
considering the danger involved with bitumen spills.

"As these sorts of heavy oils that are exempt from this tax
continue to make up a larger percentage of oil transported in the
US, it will only serve to stretch the fund even further, while
putting families, communities, and ecosystems at greater
risk," he said.

The true impact of the disaster began to unravel on Monday, when
a couple of dead ducks and 10 live, oily birds were found near
the ruptured pipeline.

Faulkner County Judge Allen Dodson says he expects a few more
oily birds to turn up in the coming days.

The spill has also had a severe impact on residents of Mayflower.
Twenty-two homes have been evacuated, forcing many to move into
nearby hotels until further notice.

RT spoke with local resident Chris Harrell, who described a
horrendous smell both inside and outside his home, and even in
his vehicle. Four days later, locals are still inhaling the
strong odor.

He said that cleanup crews are operating non-stop, creating a lot
of noise.

“It's quite an inconvenience to get in and out of the
neighborhood,” he said.

Harrell and his neighbors are also worried that bigger problems
will await long after the oil and the visible signs of the
spillage are removed.

“The major concern for many people in our neighborhood is a
longer-term impact from the spill, both environmentally and
financially. For example, what's this going to do to our property
values?” he said.